Judicial Watch, Inc. v. Rossotti, 02-1413.
| Decision Date | 24 January 2003 |
| Docket Number | No. 02-1413.,No. 02-1462.,02-1413.,02-1462. |
| Citation | 317 F.3d 401 |
| Parties | JUDICIAL WATCH, INCORPORATED, Plaintiff-Appellant, v. Charles ROSSOTTI; United States of America; Donna Dorsey; M. Peter Breslan; Wayne Hampel; Steven T. Miller; Department of the Treasury; Internal Revenue Service, Defendants-Appellees. Judicial Watch, Incorporated, Plaintiff-Appellant, v. Charles Rossotti; United States of America; Donna Dorsey; M. Peter Breslan; Wayne Hampel; Steven T. Miller; Department of the Treasury; Internal Revenue Service, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Fourth Circuit |
David Barmak, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Reston, Virginia, for Appellant. Gretchen M. Wolfinger, Tax Division, United States Department of Justice, Washington, D.C., for Appellees.
ON BRIEF:
Erica Brown, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Washington, D.C., for Appellant. Eileen J. O'Connor, Assistant Attorney General, Jonathan S. Cohen, Thomas M. DiBiagio, United States Attorney, Tax Division, United States Department of Justice, Washington, D.C., for Appellees.
Before NIEMEYER, LUTTIG, and MOTZ, Circuit Judges.
Affirmed by published opinion. Judge DIANA GRIBBON MOTZ wrote the opinion, in which Judge NIEMEYER and Judge LUTTIG joined.
In this interlocutory appeal, Judicial Watch, Incorporated, challenges the district court's dismissal of its claims for injunctive relief and money damages against the Internal Revenue Service (IRS) and certain IRS employees. Judicial Watch contends that the IRS initiated a retaliatory tax audit, intended to punish the organization for its political speech. Because the Anti-Injunction Act bars the requested injunctive relief and the law provides no damages remedy for the wrongs alleged here, we affirm.
Founded in 1994, Judicial Watch describes itself as a "non-partisan legal `watchdog' organization that relies on the Freedom of Information Act ("FOIA"), the civil discovery process, and court litigation, among other tools, to protect the American people from, and educate them about, corruption in government and abuses of power, and to enforce the principle that `no one is above the law'."
Since 1995, Judicial Watch has operated as a tax-exempt, § 501(c)(3) organization. See 26 U.S.C.A. § 501(c)(3) (West 2002). The Internal Revenue Code bars such organizations from lobbying. See id. (); see also 26 U.S.C.A. § 504 (West 2002) (); Regan v. Taxation with Representation for Washington, 461 U.S. 540, 551, 103 S.Ct. 1997, 76 L.Ed.2d 129 (1983) ().
During the late 1990s, Judicial Watch filed a number of lawsuits against President and Mrs. Clinton. On September 28, 1998, in the midst of the impeachment proceedings against President Clinton, Judicial Watch submitted a report entitled "Interim Report: Crimes and Other Offenses Committed by President Bill Clinton Warranting His Impeachment and Removal from Elected Office" ("Interim Report") to members of the House Judiciary Committee. The Interim Report claimed, inter alia, "that the Clinton Administration had operated a campaign of retribution and retaliation against its perceived enemies, using politically inspired retaliatory tax audits as a major weapon in that campaign." The Interim Report was subsequently accepted into the Congressional Record and made an official part of the impeachment proceedings in Congress.
Several days later, Judicial Watch received a letter from the IRS, signed by Agent Donna Dorsey, stating that it had been selected for an audit. The letter was accompanied by an IRS Form 4564 Information Document Request, which requested information pertaining to the political affiliations of Judicial Watch directors. After receiving the audit letter, Judicial Watch resisted IRS efforts to proceed with the audit by filing FOIA requests, meeting with IRS officials, refusing IRS document requests, and asserting throughout that the audit constituted politically motivated retaliation.
In July 1999, the IRS informed Judicial Watch that the Service was withdrawing the audit pending an investigation by the Treasury Inspector General for Tax Administration, the independent internal monitor of IRS activities. The IRS contends, and Judicial Watch does not dispute, that the Inspector General then conducted two investigations into the asserted illegitimacy of the audit and found no evidence of impropriety by the IRS or any of the IRS employees involved in the decision to audit Judicial Watch.
Nevertheless, in September 2001, Judicial Watch filed this action in the United States District Court for the District of Maryland against former IRS Commissioner Rossotti, four individual IRS agents (Donna Dorsey, Peter Breslan, Wayne Hampel, and Steven T. Miller), and the United States. In January 2002, Judicial Watch filed an amended complaint, withdrawing its claims against the United States, but adding the Department of the Treasury and the Internal Revenue Service as defendants.
The amended complaint alleges that the audit is "retaliatory, politically-motivated, and unconstitutional," violating Judicial Watch's First Amendment free speech rights, Fifth Amendment due process rights, and Fifth Amendment right to be free of selective prosecution. The amended complaint seeks an injunction against all defendants from proceeding with the audit and compensatory and punitive damages against ex-Commissioner Rossotti and the individual agents. It also includes claims for relief in connection with Judicial Watch's FOIA requests.
In support of its constitutional claims, Judicial Watch alleges that the timing of the audit letter (four days after the Interim Report was made an official part of Congress's impeachment proceedings), the timing of several subsequent IRS document requests pursuant to the audit, and the fact that it received final notice of its exempt status at roughly the same time that it received the audit letter, create a strong inference of retaliatory motive. Similarly, Judicial Watch cites the "extraordinary demand" contained in the IRS Form 4564 Information Document Request that Judicial Watch provide information on the political affiliations of its directors and the alleged refusal of the IRS to respond to Judicial Watch's various FOIA requests as evidence of bad faith and improper motive.
Finally, Judicial Watch refers to comments by various IRS agents that, in its view, suggest a retaliatory motive. These comments include the statement by Agent Dorsey on November 23, 1998 to counsel for Judicial Watch that the audit was a "hot potato"; the query by Agent Breslan to representatives from Judicial Watch at a meeting on January 12, 1999: "What do you expect when you sue the President?"; the asserted concession by Agent Miller that the audit and IRS's failure to respond to Judicial Watch's FOIA requests "had created at least the appearance of a problem"; and statements made during March and April 2000 by Agent Hampel that Judicial Watch was still on the IRS "radar screen."
On January 18, 2002, more than three years after sending the initial audit letter, the IRS served Judicial Watch with an administrative summons pursuant to the audit demanding production of documents within eight business days. Judicial Watch refused to comply with the summons, but instead filed another action in the district court seeking to stay or enjoin any attempt to enforce the summons. The court subsequently consolidated the new action with the original action.
After full briefing, the district court denied Judicial Watch's motion to stay or enjoin the administrative summons and granted the defendants' motion to dismiss all claims. Because the court did not resolve the FOIA claims, Judicial Watch moved for certification of the case for immediate appeal. The district court entered the requested certification order and we, in turn, granted Judicial Watch's petition for interlocutory review. See 28 U.S.C.A. § 1292(a)(1) (West 1993).1
The district court denied Judicial Watch's request for injunctive relief on the ground that the Anti-Injunction Act (sometimes herein, "the Act"), 26 U.S.C.A. § 7421 (West 2002), deprived it of jurisdiction to grant such relief. We review that decision de novo. Estate of Michael v. M.J. Lullo, 173 F.3d 503, 506 (4th Cir.1999).
The Anti-Injunction Act provides in relevant part that:
no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.
26 U.S.C.A. § 7421(a) (West 2002).
As the Supreme Court has emphasized, the language of the Act "could scarcely be more explicit," reflecting its overarching objective of protecting "the Government's need to assess and collect taxes as expeditiously as possible with a minimum of pre-enforcement judicial interference." Bob Jones University v. Simon, 416 U.S. 725, 736, 94 S.Ct. 2038, 40 L.Ed.2d 496 (1974); see also Sigmon Coal Co. v. Apfel, 226 F.3d 291, 299 (4th Cir. 2000) , aff'd sub nom. Barhart v. Sigmon Coal Co., 534 U.S. 438, 122 S.Ct....
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